Bailey v. Payne, NO. 2:88CV170-S-O (N.D. Miss. 9/ 1994)
| Decision Date | 01 September 1994 |
| Docket Number | NO. 3:90CV59-S-O.,NO. 2:88CV170-S-O.,No. 2:88CV171-S-O.,NO. 2:91CV38-S-O.,NO. 2:91CV37-S-O.,2:88CV170-S-O.,2:88CV171-S-O.,3:90CV59-S-O.,2:91CV37-S-O.,2:91CV38-S-O. |
| Parties | JENNIFER BAILEY, et al., Plaintiffs, v. KEVIN PAYNE, COLUMBIANA TRANSPORTATION, INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of Mississippi |
Although these consolidated cases are not factually complicated (a collision of a tractor-trailer and two automobiles), their procedural history is. Neither will be repeated, as both have been fully laid out in previous opinions and orders of this court. The only matters presently before the court involve questions of insurance coverage and liability, which have been raised via (1) the motion of the Baileys and Cooks (Jennifer Bailey and Collette Cook were the drivers of the automobiles involved in the accident) for partial summary judgment against Universal Trucking, Inc. (whose ICC placard was on the tractor-trailer involved in the collision); (2) the cross-motion of Universal Trucking, Inc. for summary judgment against the Baileys and Cooks; and (3) the motion of Empire Fire & Marine Insurance Company for summary judgment against the Baileys, the Cooks, Kevin Payne (the driver of the tractor-trailer), and Columbiana Transportation, Inc. (the owner of the tractor-trailer and Empire's insured). The starting point, however, is a motion for reconsideration which puts at issue this court's subject matter jurisdiction over these cases.
In this motion (to which no party has ever responded), Kevin Payne and Columbiana Transportation, Inc. ask the court to reconsider the order allowing the joinder of the Baileys' and Cooks' uninsured motorist carriers, USF&G and Mississippi Farm Bureau, respectively, as defendants because the addition of Mississippi Farm Bureau destroys diversity jurisdiction—the Baileys, the Cooks, and Mississippi Farm Bureau are all Mississippi citizens. This is an important motion and one the parties should have taken seriously, for under Hensgens v. Deere & Co., 833 F.2d 1179, 1181 (5th Cir. 1987), cert. denied, 493 U.S. 851 (1989), the addition of a nondiverse defendant following removal divests the court of jurisdiction.
In these circumstances, however, Fed. R. Civ. P. 21 offers a solution which will allow the court to dismiss Mississippi Farm Bureau and retain jurisdiction. That rule provides that and is used, for instance, "to preserve diversity jurisdiction over a case by dropping a nondiverse party if [its] presence . . . is not required under Rule 19." 7 Charles A. Wright et al., Federal Practice and Procedure § 1685 (2d ed. 1986). Here, the presence of Mississippi Farm Bureau is not required for disposition of the claims in these cases. If it were, dismissal would be required. Id. Instead, the addition of the uninsured motorist carriers was made only to protect the interests of the Baileys and Cooks in the event insurance coverage is not available through one of the other defendants and to dispose of all these matters in one proceeding. While the goal is noble and would indeed further judicial efficiency, this court cannot allow a nondiverse defendant to remain when to do so would destroy this court's ability to hear these cases.1 Accordingly, the motion of Payne and Columbiana to reconsider joinder is granted in part, and Mississippi Farm Bureau is hereby dismissed from this action without prejudice under Rule 21.2
In this motion, Empire Fire & Marine Insurance Company seeks a declaration that the policy of insurance it issued to Columbiana provides no coverage for the accident in question. Empire bases its request on a "radius of use" provision in the policy which excludes coverage for accidents occurring outside a 600-mile radius from the place where the insured vehicle was principally garaged (Columbiana, Ohio). Columbiana has admitted that the site of the accident, Batesville, Mississippi, is outside this radius. Only the Baileys and Cooks responded, arguing that Empire waived its right to rely on this exclusion by not bringing it forward earlier and that the radius of use exclusion violates the public policy of Ohio (where the insurance contract was made) and is therefore void.
Under Mississippi choice-of-law rules, Ohio law governs the determination of the validity of the radius exclusion clause at issue here. See Nichols v. Anderson, 788 F.2d 1140, 1142-43 (5th Cir. 1986) (). Although one Ohio court has upheld a 50-mile radius exclusion clause in a different context, see Bright v. Calvert Fire Insurance Company, 128 N.E. 2d 152 (Ohio App. 1954), there are no cases involving Ohio law, including Bright, which have reached the precise public policy issue presently before this court. In fact, very few courts in this country have considered this question at all. When they have, however, resolution has often turned on whether coverage under the policy would extend throughout the entire state of issuance if the radius exclusion was left intact. See Nichols, 788 F.2d at 1143 (); Equity Mutual Insurance Company v. Spring Valley Wholesale Nursery, Inc., 747 P.2d 947, 952-53 (Okla. 1987) (); cf. Empire Fire & Marine Insurance Company v. Dobbins, 205 Ga. App. 700, 423 S.E.2d 396 (Ga. Ct. App. 1992) ().
This court does not know whether the Empire policy at issue here was issued as proof of financial responsibility under Ohio law, see generally Ohio Rev. Code Ann. § 4509, et seq., but nevertheless turns to those statutes for guidance. Section 4509.101(A)(1) states that "[n]o person shall operate . . . a motor vehicle in [Ohio], unless proof of financial responsibility is maintained with respect to that vehicle. . . ." According to subsection (K),
The purpose of this section is to encourage the maintenance of proof of financial responsibility with respect to the operation of motor vehicles on the highways of this state, so as to minimize those situations in which persons are not compensated for injuries and damages sustained in motor vehicle accidents.
Ohio Rev. Code Ann. § 4509.101(K) (emphasis added). This language leads the court to conclude that a motor vehicle liability policy issued in Ohio must, at a minimum, cover accidents occurring within that state's boundaries.3 The question thus becomes whether the 600-mile radius of use provision at issue here achieves that mandate. In its rebuttal memorandum, Empire specifically states that "the 600-mile radius exclusion clause before this court would not exclude coverage anywhere in the state of Ohio" but offers no proof of this fact. This information is pivotal to the determination of whether this exclusion is enforceable, and its absence precludes summary dismissal. Accordingly, Empire's motion for summary judgment is denied at this time.4
Both of these motions center on the liability, if any, of Universal Trucking, whose ICC placard was in place on the Columbiana tractor-trailer at the time of the accident. It is undisputed that Universal and Columbiana, through its driver Kevin Payne, entered into a trip lease agreement on September 16, 1987. That agreement provided, in pertinent part:
During the period of this lease, vehicles shall be in the exclusive possession use and control of Lessee [Universal]. . . . The vehicles shall be designated as being operated under lease to [Universal]. If a removable device to so designate is used, it shall be displayed at all times while the vehicle is in the service of [Universal], but must be removed when the vehicle is not so used. Lessor [Columbiana] shall forfeit $25.00 if signs are not returned to [Universal] immediately upon completion of trip.
The next day, September 17, Payne, as Columbiana's agent, signed the "Receipt by Owner," which "acknowledge[d] the receipt of the equipment from [Universal] . . . this...
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